SUV and in particular the CUV segment has good growth potential - Dr Aulbur

We speak to Wilfried Aulbur, to understand his views on the India car market. Dr Aulbur was the face of Mercedes-Benz India before Mr Peter Hoengg came on board. Later, Dr Aulbur joined Roland Berger Strategy Consultants as the Managing Partner. Who can understand the Indian market better than someone who has been in this market for a long duration. We understand Dr Aulbur's thoughts for the Indian car market.

• Which segment amongst the existing ones in India today, will see a growth in terms of players and buyers? Why will it grow?

Dr. Aulbur:  The SUV and in particular the CUV segment has good growth potential. Besides the clear appeal of the body shape for Indian buyers which communicates presence, it is the high seating position and ability to handle difficult road conditions that drive demand for these vehicles.

• Mercedes-Benz and other luxury car makers still have a greater sale of diesel cars, why is it so that petrol has lesser buyers?

Dr. Aulbur:  In the luxury segment, some players have taken a call to focus on the sale of diesel vehicles (MB traditionally had a relatively higher share of petrol vehicles compared to the 2 other German companies). This reduces sales and after sales complexity in the market and for the OEM and the dealer. However, in the current environment, the sales mix may change towards more petrol vehicles going forward.

• How important will safety be in the coming years for our market?

Dr. Aulbur:  Safety is a topic that needs to be driven by regulation, especially for entry level cars. At the entry level, price sensitivity of customers is very high. Despite an increased understanding of safety, customers may still opt for lower spec vehicles simply because the initial price will be lower. Only laws that stipulate certain crash requirements, a specific number of airbags, etc. will be able to drive change in behavior in the short to medium term. While this may lead to a temporary volume drop in the entry level segment, this drop will not be sustained as customers will get used to overall higher price points.

• One car company that your research will suggest could displace the current number one?

Dr. Aulbur:  No comment.

• How could the next two years for the Indian automotive industry be? Bullish or bearish?

Dr. Aulbur:  The next year will still be challenging. Even with a new, strong government coming in, the economy may not turn around immediately. Reforms that need to happen, will take time to become effective. After that, we could see return to good double digit growth. At some point, pent up demand will have to be satisfied and with good governance faith in the India story will return.